Bharti misses the mark on earnings and revenue

Posted Jul 23rd 2009 8:40AM by Tom Johansmeyer
Filed under: International Markets, India, Technology

Bharti Airtel Ltd. (ISE: 55QN) missed analyst expectations for the second quarter. The largest mobile phone operator in India gained clients in the country's smaller towns and villages, resulting in lower than expected revenues. The company pulled in INR99.4 billion ($2.05 billion) for the second quarter -- compared to analyst expectations of INR101.7 billion. Nonetheless, revenue was up from INR84.8 billion for the second quarter of 2008. Net income grew 24% to INR25.2 billion. Net of a tax gain, however, the company missed analyst forecasts of INR23.6 billion.

Last quarter, Bharti Airtel brought in 8.44 million new users, 60% of them living outside cities. Lower calling rates have made mobile phone services more accessible to a lower income group of subscribers. While this brings the total user metric higher, potential revenues from this group is constrained by lower incomes and an effective cap on up-selling opportunities. The company's total subscriber base has reached a total of 102.4 million. Competitors Reliance and Vodafone (NYSE: VOD) ended May with 77 million and 74 million subscribers, respectively.

In the entire country, 23 million new mobile phone users entered the market, bringing the country's total to 415 million. By 2012, the country hopes to have 600 million subscribers (including fixed line).

Investor concern about the company's reliance on lower-value clients pushed Bharti Airtel shares down 1.9%, though the company is up 13% for the year.

Tags: airtel, bharti, bharti airtel, mobile, mobile phone, mobile phones